tv Closing Bell With Maria Bartiromo CNBC November 30, 2012 4:00pm-5:00pm EST
minutes ago. now it's coming in up just 9 1/2. lots of maneuvering at the close. there was a significant amount of buying. all this volatility is certainly pushing up volume. >> so we're closing out the month of november pretty flat overall for stocks. here comes december and the fiscal cliff. that's the first hour of the "closing bell." have a good weekend. maria continues now with the second hour. i'll see you monday. and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to "the closing bell." i'm maria bartiromo on the floor of the new york stock exchange. the market is closing just fractionally better on the session. it had been up about 30 points just a few minutes ago. it was wild swings and volatility because of a rebalancing of morgan stanley index. that had put a boost under virtually all the stocks in the s&p 500. as a result, we saw a pretty good move to the buy side,
although there was a fair amount of hedging. dow jones industrial average closing just about where it opened at 13,023. we got another week in the books. another week without a deal to avoid going over the fiscal cliff. and there's just one more month left of trading this year. so what is in store for investors this december? let me bring in our guests. good to see everybody. stephanie, let me get your take on investing around this fiscal cliff. before that, give me your take on this morgan stanley rebalance. what do you think happened at end here with the the market up just about a point? >> i think it just added to the volatility. that's the theme for the next couple of weeks. we are going to see a very volatile environment until we get a resolution. so in the short-term, you're kind of trading range bound in the market. i think you want to take advantage of the extremes. so into these big positive moves, you take a little off. it's not a bad thing to take profits and to have cash. i do think that when you see the market pull back and you see extremes in terms of on the
downside, i think you want to be buying because i think once you get this fiscal cliff resolution, whenever it is, i think the markets will work higher because the underlying fundamentals in the u.s. economy are clearly improving, and you also have a stabilization or soft landing happening in china at the same time. >> david kelly, what do you want to be doing here? what's your strategy for the fiscal cliff? do you think we go over it, and what do you want to do? >> for a long-term investor, you don't try and play this one. i agree with stephanie about the market probably going higher once they get a resolution. they will get a resolution. it's possible it could go into early january. i still think they're more likely to get a resolution done before the end of the year. either way, they'll get a resolution done. when that happens, then we'll resort to looking at the u.s. economy, which is strengthening a bit here. also, the extreme and relative valuations between high-quality fixed income and equities will push money towards equities. i would not run for cover here because of the volatility. i think you just have to, you
know, hold your ground through this and hope that the market moves higher next year. >> bob, this activity at the close today, you surprised at what happened? we had $3.6 billion in stocks to buy at close. we went all the way up only to come back down. >> great volume, by the way. we're going to do 1 billion shares here on the floor. that's a very rare day. normally we do about 600 million. what happens in these imbalances is the indexes are reweighed. you're simply moving around the money that's in the index in the different stocks themselves. you might get a little changes in the stocks, but the whole pot stays relatively the same. i was very encouraged today, maria. encouraged when you saw very little movement in the stock market in the middle of the day when representative boehner came out and said they'd gone nowhere on the talks. senator mcconnell described the white house offer as comical.
that normally would have moved stocks down, but it didn't. i think that's a sign a lot of people believe a deal is coming. >> rick santelli, what's your take? >> i think there's no volatile ty on boehner's comments because geithner's comments were out there last noor nigight for eveo see. we're not going to hear anything sensible. now it becomes a time clock issue. i think sometime around the third week in december if you think the last hour was volatile going from minus 20 to plus 4, you ain't seen nothing yet. all the guests like the economy. i'm not disputing good things, but gdp didn't have a lot of consumption. today, personal income and spending, the spending was down a couple tenths. next week we have two jobs reports. one could argue the combination might be barely above the 171 from just the bls last month. people can't spend without jobs. same old story in my opinion.
>> yeah, but david kelly, what about that? i know you don't want to be a short-term trader and have these knee-jerk reactions. let's face it. if we go over the fiscal cliff and this market takes a hit, i mean, there's a lot of room for disappointment in this market. this market is trading as if a deal gets done by the end of the year. if we don't, we could see a sizable decline. you got to be ready for that. what do i want to do to protect myself? >> well, the problem is i don't trust anything that's coming out of either side if washington. you never lead with your best offer, your best and final offer. clearly, they're just playing this dance here. the problem is for an individual investor, you could get out, try and make some increased volatility. try and bet on treasurietreasur. as soon as boehner and obama walk out of the white house, which i believe they'll do at some stage over the next month, as soon as that happens, everything is going to flip the other way. i'd like to find a way to play the market, but i think for long-term investors, valuation gets more and more important. the more you stretch things out.
the key thing people are miss -- i agree with rick, the economy is not that strong, but it is still growing steadily and valuations are so extreme that you know which way the money is going to go when things settle down. i just wouldn't want to be on the wrong side of that trade. >> stephanie, that's basically the way you feel. you have sort of opportunities out there. how do you see it, stephanie? >> i think what you want to do is use the volatility, use the declines, and go back to the companies that reported good third quarter earnings. go back to an ebay. >> stick to fundamentals. >> right. go back to starbucks. or you also can focus on some of the themes, right. housing is still in recovery mode and that -- i know it's well known, but if those stocks were to pull back, you'd get a great opportunity to buy a home depot or toll brothers or a number of companies. also, on the consumer, the consumer confidence is at four-year highs. that is in spite of all that's going on. can you imagine if we get a resolution what that will do and
where there will be good opportunities? those stocks, if they pull back, those are the ones you also want to be buying. >> we've already seen, bob, a handful of pretty good selling, given the fact that people are worried about higher taxes. i guess it makes sense to unload some of your winners if you're sitting on big gains. get the 15% cap gains tax now rather than the potential of the 25% in just a couple of months. >> well, broader issue -- a lot of them have been underperforming throughout the year. s&p is up 12%. a lot of people i know are up 4, 6, 7%. that's underperformance. they have a real problem how it. they have to stay invested or find some way to outperform or they're going to have problems. so what do you do? this is a real tough situation. >> all right. thanks, everybody. appreciate it. have a good weekend. see you soon. as you know, the market ending the week mixed, but we saw some wild swings following a
parade of fiscal cliff comments this week. >> lawmakers expected to meet this week to work for a compromise. >> i would hope our friends on the other side can turn off the campaign. >> we could have prevented this crisis months ago by just simply adopting what we passed in the senate. >> president obama is meeting with high-profile chief executive officers today to talk about the country's fiscal issues. >> we're just here to support doing the right thing, putting america back to work. >> we don't legislate, but we know a lot about what the consequences are of the failure to reach an agreement. >> the only way democracy works is through compromise at the end of the day. >> i'm optimistic that we can continue to work together to avert this crisis. >> our ultimate goal is an agreement that gets our long-term deficit under control in a way that is fair and balanced. >> a reversal of fortune on wall street. stocks trade on fiscal cliff comments from president obama and john boehner. >> no substantive progress has been made in the talks between
the white house and the house over the last two weeks. >> republicans know where we stand. we've said it, we've said it, we've said it so many times. >> i think all of us today are confident we can reach a bipartisan agreement by christmas time. >> according to congressional republican aides, they say they have obtained a copy of the white house's proffer here. at least $50 billion in new spending. >> do you have faith in any of them to rise above? >> would it be okay to go over? >> we will rise above. >> morgan stanley wealth management's chief investment strategist up next with his list of winners and losers. plus, how you can make money in these shaky markets as the year winds down. later, as lawsuits pile up and hewlett-packard stock suffers, carly fiorina will join me for her first interview since the autonomy disaster came to light. wait until you hear who she says deserves the blame. also, social security and
medicare in focus. is this economic backdrop cost cutting? should these programs be torn down to keep our economy from hitting disaster down the road? we'll debate this hot-button issue coming up. stay with us. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. card hassles?
welcome back with today's session in the books, there are now just 21 days in the trading year left. let's look at the winners and laggards in the s&p 500 so far this year. first, the top five. every name on this list is down in today's trading serks however, look at the triple-digit moves for the year. these are the win witheners in s&p. let's look at the laggards. apollo group leading that one. hewlett-packard, 50% of its value wiped out this year. so are these names you should be putting on your buy and sell list? joining me now to talk about strategies is morgan stanley chief investment strategist
david dorst. we want to go through the winners and losers. what are you doing at year end? is there a strategy you do at year end getting ready for the new year in terms of your investment portfolio? >> i think you want to basically sell off some of your losers, clean up the portfolio. we want to be a little bit defensively positioned going into the coming year. we think the market this coming year will only close in 2013 at 1434. it closed at 1416 tonight. 1434 at the end is only a 2% gain. you add in the dividend, you've only got a 4% gain. buy some of your dividend paying stocks. your johnson & johnson, pfizer. secondly, go for some stocks that have come down a little bit. apple, 706 was its high in september. that stock is still up 50% plus for the year. we think that thing can go to 720. buy that. buy some oracle.
buy some microsoft. >> i know this is all selective stock picking, but what about this theme of the fiscal cliff, about the idea that even if we don't go over the fiscal cliff, there's still a worry about what happens to the economy in 2013. so broad economic landscape. >> you want to be in some high had-grade corporate bonds. i'll tell you a group that's lagged way behind this year because of concern over taxes is your master limited partnerships. these things yield 6%, 5.5%, 6%. they're down 2% for the year. these are infrastructure stocks, as you know. that's a flow through like real estate investment trust. you want to have some of those. emerging markets. listen to this, maria. china is down again this year. it's been down four years in a row. china is down 10% plus this year. china is selling right now at eight times next year's earnings, if those earnings come true. russia is selling at six times next year's earnings. china and russia would be another if this broad picture that you're talking about. you want top own some emerging
markets. master limited partnerships. high-grade bonds. >> are you worried about taxes going higher on dividends and cap gains in 2013? does that cut into the reason to buy stocks? >> i think many people say it has no effect. you can go from 15% to 43%. at the margin, that can influence people. this is why you want to basically find these company that have a defensive characteristic and where you are getting enough yield so when you lose the dividend, you have some income. corporations are buying cash. banks are buying liquidity. central banks are buying government bonds. foundations and endowments and pension funds are buying alternatives. individuals are buying bonds. rich individuals are buying jewelry, art, and trophy real estate. nobody is buying stocks in a big way right now. >> and yet morgan stanley for 2013 has come out with a more
optist ism optimistic call for the s&p. what's the optimism? >> we think that in 2014 you can get $110. we put a 13 times multiple on that. it's about a 1340 closing price. you're looking at the end of 2013 at 2014 earnings. he is still looking for 2013 to be down. so we could have the market go down a little bit and you can actually, if you wait a little bit and buy in after the market has sold off, you might have a better than a 4%, 5% total return for next year. >> you still like dividend payers. you're sticking to the dividend payers like the pfizer, like the j&j, technology. does that argument change if dividend taxes go to 44 %? >> that's why you want to sit
toward the front of the classroom. stay away from the low-dividend yield stocks. >> low dividends, not high dividends. >> stay away from them. >> i'm talking about high dividends. >> if you cut the low in half, you have almost nothing left. if you cut a six or five by 40%, you still have some yield better than government bonds. ten-year treasuries are yielding 1.6%. >> crazy. no wonder everybody is searching for yield. david, always nice to see you. >> thank you, maria. nice to see you. speaking out for the first time, meanwhile, since hewlett-packard's autonomy debacle came to light, former hp ceo carly fiorina coming up next on wost to blame for the mess an what lies ahead for the technology giant. and with the cost of medicare and social security skyrocketing, one of my next guests say it's putting a drag on the economy. back in a moment. or that printing in color had to cost a fortune.
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table right now. we also have j.d. foster of the heritage foundation who says mr. baker's numbers don't add up. good to see you, gentlemen. thanks for joining us. dean, make the case. >> well wit, it's very simple. if you look at projections, we had low-budget deficits, 1.2% gdp until the economy collapsed the housing bubble. the reason why we have large budget deficits today is pure and simple. the economy collapsed and the deficits are what's supporting demand. why are we suddenly running around like chickens with our heads cut off to cut social security and medicare when those programs are needed more than ever? >> so you think we should keep spending on those programs? >> i think we need to protect retirees. they took a big hit when their house prices collapsed to then turn around and whack them again by taking away their social security and medicare doesn't
make sense. >> i'm going to come back to that. j.d., you say that's the problem. make the case. >> we know spending has shot way up under president obama. what we know is the sbiet bl entitlement programs are unaffordable as they stand. doesn't mean we need to slash medicare today. i don't know anyone suggesting that. it does mean that this is the time, the opportunity to put in the reforms to slow the growth in those programs so we can afford them for the long run so, in fact, seniors can get the benefits they've been counting on and promising. we can't promise them that now because we can't afford these programs as they currently stand. the fiscal cliff creates the opportunity to force the reforms, to put in the reforms we all know need to be put in to place. that was what bowles/simpson was au about. it's not about today's deficit. it's about the future. the moment is now. >> what about the idea that dean is making.
look, this is not the issue in terms of the debt and deficit. why are we putting this on the chopping block? >> well, he's right in one sense. president bush did a very effective job of bringing the budget deficit down until the economy fell apart. the economy is the predominant reason for today's deficits, but not for tomorrow's and for those in the years to come. we have to reform the entitlement programs, and it's very easy to say, let's not do it now, let's do it five years from now, ten years from now, when they're really critical and a pitmuch bigger problem. they're a long-term problem we can address now. >> my issue with what you're saying is you say don't touch these programs. yet, the world has changed. you look at social security, for example. the program has not changed ever. >> no, the program has changed. >> i'm talking about the -- let's talk about the last 20 years, okay? >> it has changed in the last 20 years. >> how has it changed? >> we've increased the age of
retirement to 66 now. it's going up to 67. that's a pretty big change. >> okay, okay. any other changes? yet, we're living until 100 years old. >> well, i hope you do. i wish you well. the fact is we're not. the data on this shows that most of the increases in the retirement age have gone to those at the top end. this is the problem of inequality, which has been a huge factor making the finances of social security worse. just to be clear, the program's finances are fine 20 years into the future. if those projections prove to be right, we got a lot of time there. in terms of medicare, i think j.d. has been asleep here. we actually did make big changes in the program that reduced about three-quarters of the projected shortfall over 75 years. we have been asleep at the wheel. the big problem here is the exploding health care costs in the private sector. those have slowed in the last three, four, five years. if that continues, had this whole problem is largely going away on its own. >> is there anything that you think should be cut back on in terms of spending in this
country? >> oh, absolutely. go with medicare. we spend way too much on prescription drugs. we pay our doctors way too much. there's great chances for savings there. i'm all for that if they pay the same amount there as the united kingdom. we'd save over $500 billion over the next decade. you can find savings like that. >> so you're just saying social security then. you think medicare should be cut then. >> well, i'd say it's a good way to do that. social security, we don't have -- we talked about three-legged retirement. people don't have anything other than social security. >> j.d., what about that? are there other areas that would make a difference if you were to leave social security and medicare alone? >> those are the big three. that's where the exploding costs are. you have to go after those. those are where the spending cuts need to fall. i haven't been asleep, dean. i just don't read fiction. the fiction you're reading is the line in the medicare trustee support that says that obamacare
worked. well, they also say that you can't trust any of the cuts from obamacare. they don't believe them themselves. the trustee's report is full of warnings not to believe those cuts. medicare is unaffordable, which is why simpson/bowles said we need to address it. >> the numbers have come in lower than the projections, not higher. if it's fiction, they're exaggerating on the high side, not the low side. that's been the recent history. >> j.d.? >> that's just nonsense. >> look at the numbers, pal. >> they're coming in low right now. the long-term projections don't change. >> i can't hear anybody when you both talk. the long-term projections -- >> the long-term projections are unaffordable. >> that's based on projections that hour health care system is unaffordable. we have to fix our health care system. if we fix that, then medicare and medicaid will be just fine. if we don't fix that, it doesn't matter what we do with medicare and medicaid. we're going to devastate the economy. >> how do you fix the cost of
health care then? >> as i said, i was talking about lowering the price of drugs, paying our doctors less. >> how do you lower the price of drugs? what does that mean? >> well, we give drug companies patent monopolies. if we got rid of that, we reduce the price of drugs by about 90% tomorrow. we spend close to $300 billion a year for drugs that would sell for $30 billion a year in a free market. i love the conservatives that want to protect these monopolies. >> all those people who did the work, all those scientists -- >> we have to finance them. we aren't that stupid. >> they don't deserve patent protection? >> no, there's different ways to pay them. we're spending $30 billion a year on them now. according to the drug companies themselves, they do great work. they keep lobbying for us to spend more. we have better ways to finance drug research than giving patent monopolies that just encourage corruption. we read about the corruption almost every day of the week. it's a cesspool system. >> all right, gentlemen. we'll leave it there. great conversation. we have to continue this.
hope you come back soon. thanks very much. another week over, another week closer to the fiscal cliff without a deal to avoid it. >> there's a stalemate. let's not kid ourselves. >> we already all agree we say on making sure middle class taxes don't go up. so let's get that done. >> as progress in washington stalls, we'll tell you how to make money whether we go over the cliff or not. stick around for those trades. and then up next, hewlett-packard's former ceo carly fiorina giving her first interview since autonomy mess surfaced. wait until you hear who she thinks ought to be held account pbl. it's about who lives in the yellow house, the green, and the apartment house, too. today we not only honor the oval office, but we honor the cubicle, and the home office as well. because today it's about all of us. and no matter who you are, you're the commander-in-chief of your own life.
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welcome back. take a look at this chart. ouch. hewlett-packard, the worst performing dow component this year, down better than 50% of its value this year. the recent $8.8 billion write down of autonomy just one of the many problems. autonomy was just one in a string of things that have gone bad at hewlett-packard. cnbc contributor carly fiorina was the chairman and ceo of hp. she joins us now for the first time since the news broke.
thanks for joining us. >> great to be with you. >> fist, let me ask you about y your reaction to this mess. >> yes, you know, hp is a company i love. it's an important company to the country and the world, and now a company i think is at a very difficult juncture because it's not just that acquisitions are getting written off, it's that really confidence is being destroyed. my first reaction was this is the third one in a row. eds was written down completely. palm clearly didn't help in terms of the personal products and the personal computing space. now autonomy. so to me, that suggests not just a single problem with an acquisition but maybe a systemic set of problems. >> so a systemic set of problems. is that leadership? is that just, you know, failed vision? is the autonomy deal one that
you would have ever done, for example? >> well, look, it's very difficult to answer hypotheticals like that because i wasn't in the boardroom, i didn't know what they were looking at. however, i will say this. the autonomy deal at the time it was done was done for cash at a time when the cash generating capability of the company was weaker than it had been. it was a lot of money, more than many people thought the company was worth. i think it's less now a question of who's to blame and more honestly starting with the board working to restore confidence in its processes. it's a board that has systematically destroyed value over many years. i think the board needs to do some very specific things now. >> yeah, i mean, i got to agree with you, carly. i talked about this a couple weeks ago. this board, you know, hired and fired three ceos in a couple of
years, and there's no accountability. what's the problem with the board? is it just dysfunctional? should some members be replaced? are they giving themselves raises every year as they're doing this? >> well, i don't know the answer to that, but i would say this. as i mentioned, hp has always been able to attract brilliant individuals, but as a group, and those individuals have changed over a decade, but as a group, they're clearly not performing right now. i think three things need to happen. one, i think the board really needs to think about who it has on the board, the kinds of expertise. one of the things that i would say is particularly important when you have a company the size of hp, you need to have people who understand really big companies. an ocean liner is not a jet ski. an ocean liner is not even a 200-meter yacht. an ocean liner is a specific thing. you can be a great jet ski driver and drive an ocean liner
right into the shore. secondly, i think the board needs to figure out how it spends its time. the most important thing for a board is strategy and succession. they haven't done well at either one when you look at these three failed acquisitions and the kind of turnover in the suite you're mentioning. finally, i think the board needs to answer the question, what is going on systemically with the acquisition process? is it a failure of strategy? is it a failure of due diligence? is it a failure of integration? those are questions the board should be answering and providing details to investors, i think. >> how does this happen, carly? this due diligence slip through? here we are hearing hewlett say autonomy duped us. we had michael lynch on, the founder of autonomy, a week and a half ago. he said it's absolute nonsense. we didn't dupe anybody. they're masking, you know, their problems with the fact that
they're blaming autonomy. so how does that slip through, and do you think that the problem is autonomy or are they just using this to hide their other issues? >> well, first, it's one of the reasons why i said a systemic issue appears to be a lack of quality due diligence because autonomy, whether it was fraud or not, it's quite remarkable to write off both eds and autonomy in less than a year. i mean, that's billions and billions and baillions of dollas the company is acknowledging is value destroyed. i'm quite sure that meg whitman believes that fraud was committed, or i don't think she would have taken the step that was taken. i'm also not at all surprised that dr. lynch would come out and defend himself and his company with great vigor because, as you pointed out in your interview with him, his reputation is at stake in a very
fundamental way. i guess the final thing i would say is, you know, the assets in a company are not just products. they're not just markets. they're people. so you have to work very hard to have good relations with people, particularly hard-charging entrepreneurs like dr. lynch. from the moment the negotiation begins to well after an acquisition closes. clearly, there may be some issue there as well. >> can this company be turned around? i mean, moody's has cut its rating. let's talk about the future here. do you think -- i mean, i know it doesn't happen overnight, but can this turn around? >> well, i think there are two questions there. first of all, you know, no ceo can turn this thing around in a year. meg whitman has appropriately said she needs more time. however, i think there are two issues. one, if she needs more time, what are the milestones that people should be looking towards? in other words, what are the specific goalposts along the way that hp wants to point investors and customers and employees
towards to say we're making progress, we are turning this ship. and that could include, for example, a very detailed product plan. what are the new products? why do think they it's going to make a difference? i think the second question is, does anyone have that kind of time? does anyone have three to five years in a technology marketplace that's moving more and more quickly? that's why i've said on other occasions that hp now needs to be considering every strategic option. the board needs to be spending a great deal of time examining every strategic option. because through no fault of the team in place, they just may not have three to five years because of the nature of the marketplace they compete in. >> we'll leave it there. before you go, real quick, you think we go over the fiscal cliff? >> well, i tell you, i would have said two weeks ago absolutely not. when i listen to the statements today, honestly, i think there's such an obvious solution here
and nobody seems to be talking about it. i must say i'm less optimistic today. >> they're digging in. carly, good to talk with you as always. >> thanks for having me. >> see you soon. carly fiorina joining us tonight. how do you profit from the fiscal cliff talks in washington? we'll have that trade, and it could put extra money in your wallet, whether the lawmakers reach a deal or not. up next, the head of prudential pl sits down with me. we'll talk business globally. stay with us. time to toast today's close with this. more and more shoppers are using their mobile devices to buy. mobile purchases were up more than 16% on black friday from a year earlier, according to ibm. so which device generated the most in mobile sales? a, the ipad. b, the android, or c, the iphone? find out next.
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with me exclusively to talk about business and the strong run, prudential's man in charge. lots of optimism around your stock. good to have you on the program. >> it's been a very good year for us. you know that we are in seven key asian economies. our position has been very strong. we now have a share price which is higher than the pre-financial crisis level for a financial services company. >> let me ask you about that. all we talk about, particularly when it comes to europe, is this debt crisis and the upset in the economy. are you not feeling that? how is it you've been able to see such strong gains in the business and watch your stock do so well even in the face of that? >> we are almost not present in europe. we have a business in the u.k. and that's it. some of it is also risk management because we unload most of our risk on the euro. our fundamental view on europe
is pretty bearish still. the fiscal deficits are unsustainable. there's very little work done for reforming the economy structurally. so we don't feel good about them. we have been underweight everything in europe for a long time. >> you want to continue to be underweight in europe given the debt crisis? is that the reason? >> we have about $600 billion of assets. we invest them in the long term. the long-term characteristics of economies are very important. we believe eurozone economies are in structural decline and deficit. >> let me ask you about where you have been investing. i know you've been investing a lot in asia. the emerging markets have been an area of promise for you. but they've slowed a lot. do you still want to put your money there given the fact china slowed, indonesia. some of these hot spots are nowhere they were a couple years ago. >> we grew more than 30% in indonesia. what's happening with us is that
we cater to the middle classes, and the fact there are more and more asians in the middle class is, if you wish, not correlated to the short-term economy situations. it's a huge transformation that's under way with hundreds of millions of asians entering the middle class every year. they're our target market. we sell them health and protection. you know those countries don't have very developed welfare systems. they come to us for their health insurance and protection. penetration is very low. less than 1% in indonesia. 0.7% in vietnam. we're very fortunate because our market is just starting in asia. we can grow for decades. >> you really are benefitting from this enormous population growth outside the united states. >> that's what we're riding. >> a huge, huge trend. so, i mean, even with that, which i get that.
a huge trend, population growth. that's got to be an enormous positive. standard & poor's threatening a downgrade. what do you say to the sceptics who say you want to be investing in some of these riskier areas, but there is risk attached? >> there is risk attached, but we believe the risk is higher in europe. if you look at the markets, look at the sovereign debt and how the markets rate them. a lot of asian countries are now borrowing below european nations. i'm not sure that we share s&p's view. i think the market believes what we're doing is profitable and not that risky. >> real quick on this visit you had at the white house. it was reported you turned down a top job at the world bank because of the insistence by an aide of president obama, the chief of staff. is that true? why did you turn down this job to take over the world bank? >> i should have known better. it was very, very well
researched. i have a job today. i'm not looking for another job. i have a job to do for prudential shareholders. >> and you're staying put. i'm sure your shareholders are happy about that after that 50% rally this year. thank you so much for joining us. every cloud has a silver lining, right? as dire as the prospects are for the fiscal cliff, there are still ways to make money whether we go over the cliff or not. the trade is next. stick around on "the closing bell." streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade. why use temporary treatments when you can prevent the acid that's causing it
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so as we careen closer to the fiscal cliff the question is if we are going over the cliff what should be your investment strategy. brian sutland is with me. what do we do? we go over the cliff, what do you want to own in that scenario? >> there is always opportunity to make money somewhere. what i'm looking at here is getting defensive. these defensive plays are owning volatility, owning u.s. treasuries and owning gold. those three things usually negatively correlate to the market. gold usually moves with the market. but for the most part those three things are more defensive
and using the vix especially is a way to own volatility. those are things that you want to get defensive on if we go over the cliff. if things are all right and politicians figure it out there are plays to the upside, as well. >> what about that? if we avoid going over the cliff then what? >> the market is trading at a low multiple. i think the market could move to new highs here if things play out by the end of the year and some economic numbers continue to improve. i want to own technology, apple or google. those things i bought for portfolios while keeping myself hedged with other defensive plays. i'm going about 50/50. then i will dump into one of the buckets here whether i want high beta i can make the decision in a month. >> be sure to stay tuned for "options action" right after
"closing bell" straight ahead. the looming fiscal cliff may be having an impact on baseball. brian shackman with the story. >> it might sound silly but this is no joke when you consider the average salary in major league baseball is $3.4 million. a jump in tax rates means a huge chunk of change. agents and players definitely taking notice in this. a lot of people are telling me it is not priority one because it is not so easy to get up front money in baseball which only gives big bonuses to draft picks. >> there could be some agents that will try to get some of that money front loaded but remember teams are only able to do so much. they are not going to for instance the b.j. upton deal signed with atlanta it is not as though his agent will get $75 million upfront. >> let's talk about upton.
he just signed a $75 million deal with atlanta. he got 3 million bucks in a bonus payable by december 1. it jumps right off the page. upton's former teammate signed an extension this week. part of the deal included a $1 million bonus. this is not the baseballb way. the sport is more known for deferring money so it is obvious that the fiscal cliff is a big factor. >> amazing. fiscal cliff is everywhere. thank you so much. brian shactman. it is not a doung grade to a specific company but downgrade to the european stability mechanism. what is that? that is this big body through which europe borrows bonds. you can see it trading down against the dollar. it means it is more expensive
for europe to borrow. not what we need right now. up next, is the u.s. turning to france? a french minister says the u.s. is franchising industry. [ male announcer ] trading's like a high-speed train. and you don't want to miss it with thinkorswim by td ameritrade. you get knock-your-socks-off tools, simple one-click orders, real-time paper trading to hone your skills, plus anytime you need it support. ♪ stocks, options, futures, and forex. get your trading on track. thinkorswim by td ameritrade. trade commission free for 60 days, plus get up to $600 when you open an account. plus get up to $600 if we want to improve our schools... ... what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows...
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and finally tonight my observation on where america stands in the world. there were two very telling comments. first the craziness continues in france. a steel company which operates in france is planning to close down a plant. so a french cabinet member said the company should leave france or face nationalization. and then he said this. >> barack obama's nationalized. the germans are nationalizing. all countries are nationalizing. i have also noticed the british nationalized six banks. it's true. i don't see what the problem is. >> really no problem. so those stunning comments coming after he met with the unions in paris who were upset about the potential closing of the plant and then uses america
as a cover. and then there was china. apparently our fiscal cliff mess has them up in arms. a chinese newspaper scolding the u.s. writing this. a country such as the united states that is accustomed to telling other nations to be responsible should on the one big problem concerning the future of the global economy show itself to be a responsible power. imagine that. china which we know doesn't play fair on chair or valuing currencies basically calling the u.s. irresponsible. and you know what? you can't argue with them. they are not wrong. our politicians have made it so a socialist government in france is looking to mimic us and a communist government is mocking us. take a look at the markets today. the dow jones industrial average had a burst at the close. it was up at 30 points